Case Analysis: Foxconn
Human capital management & Supply chain responsibility
Foxconn has very poor human capital management. In fact, their management of human resources almost resembles the old feudal land owner and peasant relationship. Everyone is subservient to authority and this culture of fear originates from the ‘feudal lord’ Terry Gou, the apex of the organization. He displays pictures of himself with various people in power and also has bizarre needs that all his managers remember his quotes! Managers then consider this behavior the accepted norm and hence ill-treat their subordinates, making them work long hours and punishing them for mistakes. Away from work, in the dormitories and the wider campus, guards acted like the henchmen of the big boss, often harassing the workers. The only saving grace for Foxconn was that it paid its employees on time. However as many employees have indicated, money is not the only thing. Such culture cannot be changed by simply increasing the wages. Foxconn is a key supply chain component for major electronics OEM. Its 26% market share shows the importance of Foxconn to these OEM. Being a major supplier means that Foxconn has big supply chain responsibility. It is able to get such a high market share due to its vertically integrated one-stop shop and its ability to offer a very low price. The price advantage mainly stems from its labour intensive operations in China, where migrant workers and temporary workers are paid poorly in comparison to local workers who get compulsory benefits. Some of Foxconn’s human capital issues are because of electronics manufacturers, such as itself, can only differentiate themselves from the competition on mainly price. This puts continuous pressure to keep costs low resulting in poor working conditions for workers.
In order to become a more sustainable business, Foxconn needs to increasingly invest in technology. Many of...
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